Gold Price Analysis: XAUUSD to tick down if NFP shows strong wage inflation
30.05.2022, 06:15

Gold Price Analysis: XAUUSD to tick down if NFP shows strong wage inflation

Gold registered gains for the second straight week. Sellers are set to stay on the sidelines as focus shifts to US data, FXStreet’s Eren Sengezer reports.

US yields' reaction to key US data could impact gold's action

“On Wednesday, the ISM Manufacturing PMI from the US will be watched closely by market participants, who are growing increasingly concerned over a possible recession in the US. If this data suggests that the business activity in the manufacturing sector continued to expand at a robust pace in May, the greenback could stage a rebound and limit XAUUSD’s upside.”

“Nonfarm Payrolls (NFP) are expected to rise by 310,000 following April’s increase of 428,000. Unless the NFP print offers a big surprise in either direction, the wage inflation component of the report should impact the market action. The Average Hourly Earnings are forecast to rise by 5.6% on a yearly basis in May. Strong wage inflation could be seen as a factor that can cause consumer inflation to remain high for longer-than-expected and remind investors of the Fed’s willingness to tighten its policy aggressively. In that scenario, gold could turn south amid a rebound in US T-bond yields.”

“2.7%, which is the Fibonacci 23.6% retracement of the uptrend that started in December, aligns as a key technical level for the 10-year US T-bond yield. If that support fails, a steep decline in US yields could open the door for a gold rally.”

 

 

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